This past weekend, we decorated our home for the holiday season. We put popcorn strings on the tree, decorated it with lights, and made the branches heavy with ornaments, mostly homemade ones from years past.

The best part of doing it is simply going through all of the ornaments and talking with our children about them. It’s a great chance to help them understand how they are part of our larger family. They have grandparents and great grandparents and great great grandparents out there that made some of these ornaments with the hopes that someday Sarah and I would have them and, some day after that, our children would have them.

It also gives us reason to start making our own ornaments. Right now, they take the form of children’s art, but as the years pass, their skills become more and more sophisticated and they’re beginning to make things that would look beautiful on any tree.

To me, things like this are the reason for the season. It’s not about how you celebrate or what religious beliefs you hold in your heart, but the people you hold dear and how you treat them – and everyone else in the world – with love and compassion.

Q1: Holiday guests and hotels

In previous years our extended family has all stayed at my father’s home. Not only does the main house have five bedrooms, but there’s also a guest house with two more bedrooms, which gave everyone room to stay.

The home and guest house were sold this year so I volunteered to host Christmas. We only have three bedrooms in our home and that just isn’t nearly enough space for the people. So I have been telling people that they should stay at a hotel, but as I put together plans I have learned that many people are assuming that they are staying at our house anyway. They’re either thinking that other family members are staying at a hotel or that there will somehow magically be room for everyone.

Regardless of what I tell them, there are more people that are planning to stay at our house than we really have space for and I don’t know how to make it clear to them.

I have checked with local hotels and there is space for people at the ones I checked.

I know that some of them might have difficulty with the expense, but none of them volunteered to host Christmas either. What should I do?
– Sara

What you should do is openly state to everyone in the family who exactly is staying at your house and make it extremely clear that there is no room for others. Recommend a single specific hotel for everyone to use. Make it extremely clear that there is no room.

If someone shows up expecting a room, be clear and direct. Tell them that you said multiple times that there isn’t any room and that hasn’t changed. Give them details about the hotel where everyone is staying.

Honestly, if I were you, I wouldn’t host a holiday celebration for a family that just completely disregarded what I was saying to them. If you end up having family members calling you “selfish” or demanding a place to stay, just do what you have to do to get through the occasion and refuse to host in future years.

Q2: Challenging home purchase decision

My wife and I are currently caretakers of her grandpa’s house (he’s in assisted living). We are paying reduced rent in exchange for our help keeping up the house. My wife and I really like the house. It’s an older two bedroom home in the midwest. Her grandma and grandpa built the house after WWII with his GI bill. It is the house her dad came home from the hospital in when he was born. We love the family history and the fact that we know the history of the house from day 1.

In the next year, her grandpa will need to sell the house (assuming his health stays strong at 94 years-old). My wife and I have been given the opportunity to buy the house without it going on the market. It saves everybody money and headache. As stated before, we love the house. The location is great (near a “park and ride” for my wife, a short commute for me), the neighborhood is a modest working-class neighborhood with many kind people, and it is the right size for the two of us plus 2 cats. Yes, I’m aware that there is a fair amount of emotion already tied into this house, which is why I’m struggling and would like your advice.

My wife and I both have good jobs. While no job is secure, neither of us has had much need to worry, even through the recession. Combined, we make about $110K/year before taxes and deductions. We are paying off our debts using the Debt Snowball method, and our snowball is up to about $2000. Unfortunately, we have around $101K in debt (over $88K of which is student loans). The other debt is a car loan (late model used), and one line-of-credit balance.

I’m not sure what to do about the home purchase. We have never purchased a home. Most of our married lives we’ve been focused on paying down debt. I’ve tried looking for advice on buying a home when you have a large chunk of student loans. Where do you stand on purchasing a home in this situation? We would love to be debt-free, but we know our finances will go up whether or not we buy the house (renting somewhere else will be more expensive than our situation right now). We’ve spoken with banks and have been given the green light to buy a house if we decide it’s right for us. I guess I’m just wondering if debt payoff should trump the purchase of a modest house, especially one that we know the history on for the past 60+ years.

I’m aware that the answer involves a lot of “it depends…”, but I’m interested to hear your take on our situation if you’d be willing. I’ve tried searching for advice on The Simple Dollar, but I had trouble finding advice on a similar situation, even though I’m sure you’ve touched on it.
– Kevin

There are absolutely a lot of “what-ifs” with this situation. Are you getting any discount on the house if you buy it? What will your monthly expenses look like if you’re paying a mortgage, insurance, property taxes, and so on versus paying rent on the house? Can you afford that change?

Your financial situation doesn’t look like one where I would absolutely avoid buying. Obviously, you’re not in perfect shape, but you’re not in a disastrous paycheck-to-paycheck situation either.

I think if the purchase is financially reasonable and if there’s any sort of discount involved, I’d go for it. If there’s not a discount, I’d really think strongly about whether you truly want the house – and don’t buy it if you aren’t sure.

Q3: Frugal gifts for elderly relatives

Each year we give a Christmas gift to my grandfather. I try really hard to find something I think he will like but recently I realized that many of the gifts we have given him and that others in the family have given him are just sitting in the downstairs walk-in closet. I am just completely lost about how to handle this. He doesn’t need money and seems to not really want anything.
– Carly

The best give you can give here is time. Simply pick a few Saturdays in 2016 and give him three or four gift certificates for those days, stating you’ll spend the full day with him, take him out to lunch, and do a few hours worth of chores for him. Identify the dates in advance for him and put them in your own calendar.

That will mean way more to him than another physical item he probably doesn’t want.

The thing is, you’ve got to stick with the commitment. If you pick a weekend and then later on find out that there’s something fun going on, don’t reschedule. Stick to what you committed. That’s the actual gift part of this – he’ll know that you’re probably giving up on some things you’d like to be doing in order to spend the day with him.

Q4: Advance preparation for personal risk

With all the mass shootings that are constantly happening in America, I’m worried about my future and loved ones. I like to hope for the best, but I want to be prepared in case something bad happens at, say, the Star Wars VII midnight release. I’m young and unmarried, but I know I don’t want my parents or other family making decisions in the event of my death or serious injury. I would want my partner to do all of those things instead. Do you have a list of things I need to do to prepare? I know I need to set up a last will and a living will too, and probably life insurance. Am I missing anything? What documents matter if I’m too hurt to make medical decisions?
– Terry

First of all, the fear of being hurt by gun violence is something that is largely stirred by the media. You are actually far more safe than you were going out in public in, say, the 1990s, let alone the 1980s or 1970s. In 1993, there were seven homicides by firearm for every 100,000 Americans, while in 2013 that figure had dropped to 3.7, according to the Washington Post. In 1980? Try 10.8 homicides by firearm per 100,000 people. The reality is that gun homicides are actually far more exceptional than they once were, which is why they garner more media attention than ever before. You had far more reason to be worried going out in public in the past than you do today.

Having said all of that, there are a lot of things you can do to prepare if you’re worried about this. You should have a healthcare power of attorney set up (it’s a document that gives someone else the power to make medical choices for you if you can’t do it for yourself) and have a frank discussion with that person. You should also have a will set up. If you have those in place, you’ll be okay.

The most important thing you can do, though, is to make sure that you’re not afraid to participate in everyday life. Don’t let fear affect your choices, especially when the reasons are flimsy.

Q5: Directionless

I feel completely directionless right now in my life. I go to work, come home, have a bite to eat, and go out to bars pretty much every day. I date but nothing ever lasts. I’m saving a little for retirement but other than that my life is a mirror image of where it was two or three years ago. Not sure what to do but I want things to change.
– Tabitha

You obviously don’t like where you’re at, so where do you want to be? Where would you like to be in, say, five years if things turned out pretty well for you? What would be different?

Whatever that picture of the future looks like, spend every day asking yourself what you can do today to head toward that picture. Don’t worry about tomorrow or next week. Focus on what you can do today.

I’ve felt directionless at various points in my own life and that’s honestly the best (and maybe the only) way out of it.

Q6: Identity theft strangeness

In August I received an email confirmation for an item I didn’t order and that wasn’t put on any of my cards. The email address was my own and both the shipping and mailing addresses were an address that I lived about ten years ago in another state. When I called the (legitimate) company, they were able to add that the card used was a MasterCard. Of course, I cancelled the order and put a fraud alert on my credit report. However, when I checked my credit report, there were no new cards in my name—in fact, I don’t have a MasterCard at all and never have!

Last weekend, this happened again three times. Each night, in the wee hours, I got an email confirmation of something I didn’t order, to be shipped/billed to my old address, that was purchased using a card I don’t own. The first order was on that same MasterCard, and the next two were on Visas—again, cards that I don’t own. Two out of the three companies thought something was fishy and sent me a followup email asking for more information to make sure I had made the order, and for one of them, “my” card was actually declined. Again, I cancelled the orders and checked my credit report, but still no new cards appeared on there. It seems like the thieves have only “stolen” part of my identity.

I can’t seem to find anything online about this sort of half-scam. These people aren’t damaging my credit since they’re not opening a card in my name, but this is annoying and makes me nervous that I could be compromised somehow down the line. I have a very secure email password that I haven’t entered on any public computers, plus two-step verification. I just don’t see what I can do to prevent this—not to mention my confusion over how these thieves benefit—surely they know that if they use my email, I will receive a confirmation and cancel the order!
– Jessica

There’s really not much you can do here except keep your credit on lockdown. Keep that fraud alert maintained on your credit report and examine your credit report often to make sure nothing’s popping up.

My guess is that whoever is trying to use your identification here only has part of your identification or has part of the identification incorrect. They may be using the right address and name but have an incorrect Social Security number, for example, and the systems of the credit card issuers are allowing them to keep doing it.

Like I said, all you can really do is watch your credit, so be vigilant about that.

Q7: Leftover ham ideas?

What can you do with leftover ham? We always have ham at Christmas and it seems like a lot of it goes to waste.
– Alexa

Just take all of your remaining ham, cube it into small pieces, and save it in quart freezer bags, about half a pound of meat in each one.

Then, in the future, when you’re making soup, pull out a bag and add the contents to the soup. When you’re making scrambled eggs for a few people for breakfast, pull out a bag and add it to the scrambled eggs. When you’re making a meatloaf or hamburgers or meatballs, pull out a bag and mix it in with the meat to add interesting flavor.

There’s really no better use for leftover ham than this, at least as far as I’ve found.

Q8: Retirement savings and risk

I am 27 and have around $9000 in retirement savings so far (I withdrew a portion to buy my first home, which is allowed in New Zealand). I have been reading your retirement articles and decided to have a good look at how my retirement money is invested, but I’m not sure how I should structure my investment. I belong to kiwisaver (You can find more info here kiwisaver.govt.nz if you’re interested in how the programme works), and they offer 6 investment types, from no risk/no gain through to high risk/high potential for gains. I’ve copied the details below. Basically, I’m not sure how to allocate my funds. I can have a percentage of funds in as many or as few investment types as I like, as long as the percentages add up to 100%. What do you recommend I do? I’ve had all of the money in the conservative fund since that I what I picked when I signed up at 19, but I don’t think that is the right choice.
– Danielle

At your age, you should not be in a conservative fund. You should have all (or almost all) of your money in a growth fund, one that will have a high average annual rate of growth but will have some very intense down years balanced with some amazing up years. That’s because you have a lot of years left for things to balance out to that high average.

You shouldn’t be in a conservative fund until much later, like when you’re retired or very close to it.

In your shoes, I’d move at least 90% of my money into growth funds (high risk/high potential for gains) and leave that money there until you’re at least 45. At that point, start shifting it gradually down into less risky options.

Q9: Money saving coffee strategy

One strategy I learned from my dad is this: after you finish off a pot of coffee, add another teaspoon of coffee to the basket and stir it around, then run another pot immediately. The second pot tastes basically the same as the first and uses only a fraction of the coffee. He actually keeps doing this throughout the day as long as new pots are needed but then dumps the grounds at the end of the day.
– Kevin

This makes sense to me. Coffee grounds still have flavor in them ater the first pot, so mixing in a bit of additional grounds with the old stuff would add up to enough to make another pot.

I’m not sold on the third/fourth/etc. pot of coffee using this method as I’m almost sure everything would get really bitter, but for a second pot, especially fairly quickly after the first one, it seems like a great idea.

Q10: Cheapest lifestyle?

How much would you need to live on to have the cheapest lifestyle?
– Frank

Honestly, nothing. You could live in America with no income at all and no savings at all and survive. You probably wouldn’t have the life you would like, but you could certainly do it, especially if you applied some street smarts to making it work.

This question really boils down to the kind of assumptions that you have about what’s needed to live in the modern world. What do you consider a baseline to “live” in America? Do you need a home of your own? How much clothing do you need? Do you need electricity? Running water at home? All of those things add up.

I’m not sure what I would consider the “baseline” lifestyle for myself and my family. I wouldn’t probably want to live without those basic services.

I tend to think an income around $12,000 to $15,000 a year is a baseline in a small town or rural area, with more needed in a city due to housing costs.

Q11: Windfall after financial turnaround

I’ve been able to pay off *all* of our debt – 50K worth. 12K came from regular bill paying this year and the other 38K came from an unexpected inheritance. It’s a weird feeling to know that someone’s passing has left me with a big emotional hole but has freed me financially. Literally her death has given my husband and I a new financial life. It’s a bit of a guilt trip to say the least.

Anyway, that’s not the point. The point is that I’m *still* expecting to receive about $30K next year and now that we’re debt free, we’re working on defining our next goals, but it’s a little daunting since for a decade my main, and often only, financial goal has been working on paying off school and other debt. I’m a goal-oriented person so with this huge milestone behind us, I feel like I’ve lost direction and a little steam. We didn’t have a lot of consumer debt, the debt we had was student and some car loans, but we paid off $120K in the last 10 years, not including the interest (gah! just writing that number is insane. We could have bought a house for that). I just started using YNAB, so that’s given me something money-oriented to work on while we think about next steps.

If you have any advice regarding next steps, I’m all ears. Some things we’re considering – opening a 529 for our daughter, opening a Roth IRA, putting away for a house (we’re already saving regularly for vacation, new car, car maintenance, emergency fund, and medical expenses), I’m considering getting a second master’s degree that would open up a different career path for me (I work at a university so it’s very cost effective for me, though requires a significant time commitment). I’m already putting away $650 each month into my work retirement account, not including the $180 they automatically deduct for my pension (state job). This is not a bad problem to have – it’s an awesome problem- and I know you’ve written about this in the past, but it’s finally applicable to me and I’d love to hear your thoughts
– Aimee

You named a bunch of different goals. Your answer, honestly, lies in whichever of those goals is most important to you personally. It might be the Roth IRA, which would lead you most directly to a strong retirement. It might be a 529 for your child, which would lead to a cheaper education and a better financial start on her adult life. It might be saving for a down payment, which would move up home ownership in your life. It might be a master’s degree, which would open up a new career direction.

Don’t look at the actions. Look at the outcomes. Which outcome would make you happier in ten years? Career flexibility? A cheap college career for your daughter? A healthy bunch of retirement savings? A home of your own? Which one would make you happiest?

Whichever it is, that’s the path you should be following. Spend some time thinking about it. Visualize where you want to be in five or ten years. You’ll be glad you did.

Q12: Hate job, close to retirement

I’m 54. In five years I will be able to retire and I already have enough in retirement savings to make it work. The next few years are all about building a buffer against downturns. The problem is that I want to retire today, which I could do but I would be pretty exposed to stock market downturns and other shifts. I really don’t enjoy going to work any more and the thought that I could walk away is really tempting. Suggestions?
– John

Take each day one at a time. Remind yourself that today, you are securing your retirement. That’s what you’re working for. You’re swapping those hours for a step toward a more secure retirement where you don’t have to worry about these things and that an economic downturn won’t send you right back to work in an even worse situation.

Think about what would happen if you did quit right now and 2008 repeated itself in 2016 or 2017. You’d be in a pickle without that secure job.

Every day, go to work and remind yourself that today is a day I’m spending to make sure that when I do leave, I never have to come back and I never have to deal with an even worse job. Then, retire as soon as you can make things work.

Got any questions? The best way to ask is to follow me on Facebook and ask questions directly there. I’ll attempt to answer them in a future mailbag (which, by way of full disclosure, may also get re-posted on other websites that pick up my blog). However, I do receive many, many questions per week, so I may not necessarily be able to answer yours.

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